The company said there were consistent gas readings across these coals, indicating potentially significant coal bed methane (CBM) resources. The coals are Tertiary aged and low rank.

Gas readings of up to 1000 units were recorded while drilling, and gas effervesced from coal chip samples in water. Coals from several zones desorbed gas causing coals to break up naturally, extending the well diameter in the coal zones.

Arrow has selected a coal interval from 565m to 610m for flow testing with the well to be cased to 550m and temporarily plugged using the current rig. The rig will then move off the site and a post completion flow test of the seam, using a work-over rig, is planned for early February.

As reported earlier, Arrow had also confirmed the presence of gas around 320m. This is believed to correspond to the zone which flowed up to 500mcfd in 1989 in the NDD15 well.

Arrow holds a 100% interest in the Nagoorin Graben (ATP 679P) and 100% of adjacent ATP 716P that covers the remainder of the deeper coastal Tertiary basins in Queensland.

Gladstone and the surrounding industries and power stations offer the fastest growing gas markets in Queensland.

The Boyne River CBM discovery is the nearest gas accumulation to Gladstone and, as with Arrow's other recent CBM discoveries near Swanbank and Beaudesert south of Brisbane, the field could potentially supply local gas markets by direct pipelines and in-field compression thereby avoiding third party pipeline charges.

The drilling rig used to drill Boyne River -1 will now be moved to drill North Giligulgul -1 in ATP 574P in the Surat Basin in Queensland. This prospect has the potential to contain recoverable reserves of up to 16 million barrels of oil.